UK Government secures CO2 supply deal

By James Ridler contact

- Last updated on GMT

The UK Government has secured CO2 supplies until January 2022
The UK Government has secured CO2 supplies until January 2022

Related tags: Drinks, Meat & Seafood, Carbon dioxide

Supplies of carbon dioxide (CO2) for the UK have been secured until the new year, thanks to a deal agreed between Government and supplier CF Fertilisers.

CO2​ suppliers have agreed to pay CF Fertilisers a price for the CO2​ it produces that will enable it to continue operating while global gas prices remain high, drawing on support from industry. The deal runs until January 2022.

Business secretary Kwasi Kwarteng said: “Today’s agreement means that critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support.

“The government acted quickly to provide CF Fertilisers with the support it needed to kick-start production and give us enough breathing space to agree a longer-term, more sustainable solution.”

Responding to the news, British Poultry Council chief executive Richard Griffiths said: “Our member businesses have worked tirelessly to mitigate the issues brought on by the recent CO2​ episode and the announcement of a deal provides some respite for sectors like our own.

Longer-term solutions

“We must now start thinking longer-term and look to solutions to build resilience into our supply chains. We are waiting for more information from Government on the deal and look forward to working with them upon hearing further detail.”

The relief that the Government was able to secure its deal with CF Industry was shared by the Food and Drink Federation’s chief executive Ian Wright.

 “This should ensure a consistent supply through the vital food and drink production period in the run up to Christmas,” ​said Wright.

While welcome news, Wright was quick to highlight the increased cost of buying CO2​ was yet another burden on the food and drink industry which was already facing enormous stresses.

Pressure on prices

“This will of course add more pressure on prices for shoppers and diners,”​ he added. “We continue to work with the Government to ensure supply continues.

“Once we are certain that the immediate supply issues are resolved, we will then turn our attention to the need to build resilience into the production of CO2​ to protect our food and drink supply chain.”

A spokesman for the British Soft Drinks Association said the certainty of supply had lifted a weight of producers’ shoulders, especially when factoring the rising costs of ingredients.

“Although CO2​ is a only a small percentage of total cost for most soft drinks producers, the significantly higher prices for supply only add to the economic pressures already facing manufacturers, including the shortage of HGV drivers for distribution,” ​they added.

“We continue to urge longer term interventions to ensure the CO2 market is more resilient and stable.”

Related topics: Supply Chain

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